daytrades april 19 afternoon, page-119

I've been trading for 3 and a half years full time but still make mistakes on a daily basis. I thought i'd share my most recent potential disaster.

Averaging down is a risky business, but as Im a discretionary trader, Ill do what I think is best at the moment of the trade. Ive got out of jail with a few, and others have cost me.

If I decide to average down with a trading stock, the second parcel needs a very tight stop - a breakeven if possible, then either sell the second parcel for breakeven and average in at a lower level, or sell out and move on.

I managed to get caught out recently with BRD. I purchased a parcel at 2c and bought again with a larger parcel at 1.7c, average 1.8c. One large seller wiped out my buy orders at 1.7c and now the stock has dropped back to 1c (I made a conscious decision to ride it out).

What could I lose from riding it out?

25% of the capital currently in my trading account if the stock ends up worthless.

Time spent dwelling on the trade resulting in missed opportunities elsewhere.

Capital tied up.

What can I gain from riding it out?

The price rises and I get out with damage limitation, breakeven or profit.

Wait until June and offset taxable income.

The most important factor for me, is ride it out, see it sitting there every day, and use it as reminder to take more calculated risks and not to get too lazy as the market has a habit of waking you up.

There has been an upside to large one off losses in the past, and that was being more comfortable with larger position sizes which will likely result in larger dollar losses on a daily basis.

Not great for the ego, but a necessary part of the trading journey.